Hard truths about tomorrow's world
Editorial
IN HER lecture to the Foreign Service Institute last Thursday, Ms Elena Martinez, visiting UNDP official made a startling disclosure about the changing configuration of financial relations between the industrialised world and developing countries. Over the past five years, she said, Official Development Assistance (ODA) to the developed world has been undergoing decline, and at present this Assistance, which is inclusive of bilateral and multilateral aid, is just under US$40 billion. Simultaneously, however, Foreign Direct Investment (FDI) totals US$250 Billion annually. "The vast movement of capital and technology that characterises globalisation is thus leading to a situation where developing countries stand to benefit far more from private sector investment than they do from Official Development Assistance," Ms Martinez told her audience. The UNDP envoy pointed out that while 80 per cent of Foreign Direct Assistance goes to a small group of high growth developing countries, the majority of countries in the Third World have to make do with only three per cent of the total. "These are hard truths to accept, yet they are the features of the world of tomorrow: less money for development, and more money for Foreign Direct Investment - but only for those countries which can offer an attractive investment climate." Ms Martinez, whose visit to Guyana was in part to observe the progress and challenges of the Poverty Eradication Programme for the Northern Rupununi, is the Assistant Administrator of the United Nations Development Programme (UNDP), and Director of the Regional Bureau of Latin America and the Caribbean (RBLAC). And her insights into the changing environment of financial flows from the north to the south have tremendous implications for Guyana's growth and development. While it was generally known that financial aid flows from the industrialised world to developing countries have been rapidly drying up since the early years of this decade, not many citizens were aware of the fact that some 80 per cent of Foreign Direct Investment is concentrated in 12 developing countries that are described as "high growth". No doubt, within a few years the linked phrases, "less money for development, and, more money for foreign direct investment" will gain currency in economic circles and may perhaps come to spell doom and marginalisation for many backward countries, whose hopes of achieving modernity in an increasingly technology-driven world dwindle by the year. More pertinently, however, Elena Martinez's assertion that Foreign Direct Investment will go to those countries which offer attractive investment climates speaks directly to state authorities, social organisations and even the itinerant pavement vendor in Guyana. For while state officials can implement critical policy decisions to lure investors to the country, all elements in the society will have to play their part in helping to create a business-friendly environment that will encourage legions of foreigners to view the potential of this country as a viable prospect for their dollars. All stakeholders in Guyana would be well advised to consider these hard truths of international financial systems and adopt the mechanisms to meet the new challenges.
|